Seeing as the Fed's role has only had about 6 months to play a role...generally the point in time SOME effect begins to become apparent...I would say it is still too early. A 1/2 point, while a large cut, wasn't really going to have a major effect by now. That said, the beginnings of moderation are apparent. Indeed, in many sectors, the tide has turned (read below).
The market itself isn't going to blast off, and I never said it would. However, it has moderated and should begin a slow increase over the next 6 months. Should it set new lows...I'd change my view (assuming other bad news accompanies it).
As for ORCL, I don't think that a 40% increase from lows is "not gone up". In fact, the company is one of the few that has beaten earnings (albeit by a penny) and is showing strong signs of growth in quarters that are not typically its best.
As for psychology, it should've really plummeted by now if things were truly bad. Given the % increase in the unemployment rate (which is "recessionary" by most standards, but still very low in real terms), you'd expect more people to be feeling down. However, consumer confidence remains considerably bouyant.
The key to long term moderation and growth of the economy is now left for a final event to occur: consolidation. As I stated in several earlier posts, this would occur....and it has begun. CPQ, among other companies, has set aside a large sum of money to make acquisitions. As more companies do this, individual markets will stabilize and profits will begin rising again.
U.S. Economy: Factory Index Rises to Seven-Month High (Update3)
By Carlos Torres, Siobhan Hughes and Jeff Green
Washington, July 2 (Bloomberg) -- An index of U.S. manufacturing in June rose to a seven-month high and consumer spending increased more than
expected in May, both signs the economy may be starting to recover from its factory-led slowdown.
The National Association of Purchasing Management's index increased to 44.7 last month from 42.1 in May. Last month's reading, the highest since
November, was boosted by gains in orders and production. Still, a reading below 50 signals a decline, and the index has been in the 40s since August.
``I feel like we've hit bottom and we're coming back,'' said Michael Kluiber, senior vice president, global automotive, for Rockwell Automation, the
largest supplier of factory automation equipment for the U.S. auto industry. ``We're still not out of the woods. But every month has been better than the
month before.''
Auto sales are one reason spending by consumers rose 0.5 percent in May, the same as in April and more than the 0.4 percent gain forecast by
analysts. Demand for durable goods such as appliances and autos jumped 1.2 percent. Sales of cars and trucks through May were running at a
seasonally adjusted annual rate of about 17 million vehicles a year, ahead of predictions earlier this year of 16 million to 16.5 million.
No Recession
Americans have increased their spending on goods and services this year, even amid slowing growth and rising unemployment. ``Consumers are doing
their part to keep the economy out of recession,'' said Lynn Reaser, chief economist at Banc of America Capital Management Inc. in St. Louis.
``The economy appears to be shaking off its slump of the past several months,'' she said. |
